SINGAPORE: Malaysian palm oil slid for a third consecutive session on Tuesday to its weakest since mid-August on expectations of lower imports by top buyer India after the country raised import duties on vegetable oils.
India lifted the import tax on crude palm oil to 30 percent from 15 percent and increased import tax duty on refined palm oil imports to 40 percent from 25 percent.
The benchmark palm oil February contract on the Bursa Malaysia Derivatives Exchange dropped around half a percent to 2,615 ringgit ($631.34) a tonne at end of the morning session.
Earlier in the day it slid to 2,612 ringgit a tonne, its weakest since August 16.
India’s edible oil imports are likely to drop to 15.5 million tonnes this year, down from an earlier estimate of 15.9 million tonnes.
“Primarily India’s move is impacting prices as it is seen as a drastic step,” said a Kuala Lumpur-based trader. “Secondly, production is not reducing as had been expected.”
Indian oilseed crushers had been struggling to compete with cheaper imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans which have been trading below government-set prices in the physical market and angering farmers.
On the technical front, the palm oil third-month contract may drop more to 2,606 ringgit per tonne as suggested by its wave pattern and a Fibonacci ratio analysis.
In other related edible oils, the most-active soybean oil contract on the Chicago Board of Trade was unchanged, while Dalian Commodity Exchange soybean oil ticked lower. Dalian palm olein lost 0.6 percent.